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Supply chain transparency only answer to hostile campaigns

By Jane Byrne , 22-Mar-2010
Last updated on 22-Mar-2010 at 15:37 GMT

Food companies must ensure their supply chains are transparent and socially responsible in order to prevent backlashes from consumer activists and non-governmental groups on Facebook or Twitter, which could have costly brand repercussions.

Swiss food group Nestlé has been at the centre of a PR firestorm after Greenpeace released a report last Wednesday that looked into how the company was sourcing palm oil.

Palm oil is used extensively in food and toiletries, but its production has had a devastating effect on South Asian rainforests, clearing habitats for endangered species like tigers and orang-utans, while also adding to carbon emissions.

Within hours of the Greenpeace campaign kicking off, the Swiss food group said it had stopped buying palm oil directly from Indonesia's Sinar Mas due to concerns about rain-forest destruction. However, the environmental NGO said that the Swiss group continues to use Sinar Mas palm oil in its products.

Other leading food companies have already stopped buying from Sinar Mas due to its alleged deforestation practices, with Unilever cancelling its contract with the supplier last year, and Kraft doing the same last month.

Nestlé stated that it still purchases palm oil from Cargill, which sources from Sinar Mas but the Swiss food group insists it has sought assurances from the commodities group about its supply chain.

Cargill, in turn, said that it is awaiting the response of Sinar Mas to Greenpeace’s allegations before it will take action to delist the oilseed supplier.

Greenpeace stressed that it has, in fact, contacted Nestlé with evidence of Sinar Mas’s practices many times, most recently in December 2009. Its current campaign against Nestlé has included protests and a video launched on YouTube, which the environmental NGO claims the Swiss food group tried to block.

And Nestlé’s response to disgruntled consumers using its Facebook page to post negative comments regarding its continued use of Sinar Mas was a threat to delete profile pictures and comments that included an altered Nestlé logo.

Nestlé's approach to dialogue with consumers on its Facebook site, employing corporate style language in the informal social media space, has been termed a PR disaster for the food group by industry commentators who argue that it is almost always counter-productive for a company's image to try to take down a video on YouTube or delete comments on a Facebook Page.

It remains to be seen how damaging this campaign by Greenpeace will be to Nestlé.

Meanwhile, the World Wildlife Fund (WWF) estimates that a mere one per cent of sustainably sourced oil is sold as certified and environmental activists claim that trade in sustainably produced palm oil is disappointingly low because companies such as Nestlé and Unilever are not prepared to pay a premium for it.

The first 500-tonne shipment of certified sustainable palm oil reached Europe just last year and it is hoped that strides will be made over the next five years towards greater availability. But investment in infrastructure and scheduling of future shipments is heavily dependent on multnationals like Nestlé demonstrating that strong demand is there.

WWF’s senior policy officer for food and agriculture Adam Harrison said in October that some companies are buying “fairly substantial quantities … but now it’s a question of whether the majority will follow.”

He added: “If they do, it will transform the market, giving producers the confidence to grow more sustainable palm oil.”

With consumer demand for sustainability on the rise, companies such as Nestlé, Unilever and Kraft must demand accelerated palm oil certification to avoid further hostile campaigns by media savvy activists as well as potential damage to their brands.

The net effect of sustainably produced palm oil will be a considerable reduction in greenhouse gas emissions and securing of habitats for threatened species - no small prize.